2012 Lie of the Year: Government is affordable

posted at 12:01 pm on December 24, 2012 by Ed Morrissey

So says Janet Daley in yesterday’s London Telegraph, but it’s also the most successful lie of the year, too. Even though exploding deficits make it clear to anyone who can do math that Western governments are unsustainable, voters flocked to the standards of the big spenders in this year’s elections:

Was 2012 the year when the democratic world lost its grip on reality? Must we assume now that no party that speaks the truth about the economic future has a chance of winning power in a national election? With the results of presidential contests in the United States and France as evidence, this would seem to be the only possible conclusion. Any political leader prepared to deceive the electorate into believing that government spending, and the vast system of services that it provides, can go on as before – or that they will be able to resume as soon as this momentary emergency is over – was propelled into office virtually by acclamation.

So universal has this rule turned out to be that parties and leaders who know better – whose economic literacy is beyond question – are now afraid even to hint at the fact which must eventually be faced. The promises that governments are making to their electorates are not just misleading: they are unforgivably dishonest. It will not be possible to go on as we are, or to return to the expectations that we once had. The immediate emergency created by the crash of 2008 was not some temporary blip in the infinitely expanding growth of the beneficent state. It was, in fact, almost irrelevant to the larger truth which it happened, by coincidence, to bring into view. Government on the scale established in most modern western countries is simply unaffordable. In Britain, the disagreement between Labour and the Conservatives over how to reduce the deficit (cut spending or increase borrowing?) is ridiculously insignificant and out of touch with the actual proportions of the problem. In the UK, the US, and (above all) the countries of the EU, democratic politics is being conducted on false premises.

Just remember that class warfare, and not patriotism, is now the last refuge of the political scoundrel:

How do you propose to go on providing the entitlements that you have sworn never to end, without any money? The victorious political parties of the Left have a ready answer to that one. They will raise taxes on the “rich”. In France and the United States, this is the formula that is being presented not only as an economic solution but also as a just social settlement, since the “rich” are inherently wicked and must have acquired their wealth by confiscating it from the poor.

Of course, the moral logic of this principle is absurd. The amount of wealth in an economy is not fixed so that one person having more means that somebody else must have less. But, for the purposes of our problem, it is the fault in the economic logic that is more important. The amount of money that is required to fund government entitlement programmes is now so enormous that it could not be procured by even very large increases in taxation on the “rich”. Assuming that you could get all of the rich members of your population to stand still and be fleeced (rather than leaving the country, as Gérard Depardieu and a vast army of his French brethren are doing), there are simply not enough of them to provide the revenue that a universal, comprehensive benefits system requires. And if all the French rich did stay put, and submit to President Hollande’s quixotic 75 per cent income tax, they would soon be too impoverished to invest in the supply side of the economy, which would undermine any possibility of growth.

We have clucked our tongues at Greece for the last couple of years, but how bad is it here? Dale Franks lays it out at QandO:

Right now, mandatory entitlement spending alone is 62% of the Federal budget, and it will rise continuously under present law. At the same time, federal revenues don’t even cover the cost of those entitlements, plus interest payment on the national debt.

Think about that. We could eliminate the entire Federal Government except for entitlement spending and interest on the national debt, and we would still have to borrow money to pay for it.

The president’s proposal for increasing taxes on “the rich” would bring in an extra $40 billion dollars next year. So, instead of borrowing $1.1 Trillion next year, we’ll only have to borrow $1.06 Trillion. Somehow, we are told, this will be massively helpful. …

But, really, anyone who isn’t as dumb as a bag of hammers already knows that the amount of government we have is unaffordable, simply by noting that we’ve increased the national debt from $1 trillion to $16.3 trillion since 1980. It took us 190 years to accumulate $1 trillion in debt. And 32 years to multiply it more than 15 times.

We don’t have a revenue problem. We have a spending problem, but that’s not the worst of the problems we face now. We have a delusion that this situation will go on forever without needing a solution that brings spending into balance and working off our debt. Greece should have taught all of the Western nations the folly of that delusion.

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We have a delusion that this situation will go on forever without needing a solution that brings spending into balance and working off our debt.

Not all of us suffer from this delusion, though for too many do. And far too many know it’s reality, and want it *anyway*, because… there are three sides to this ‘let it burn’ scenario.

There is “us”, who would remake the country after the fashion of the founders; there are those who are clueless and will be caught in the middle; and there is Obama & Co. who are, I think, intentionally setting fire to it and throwing gasoline on it – because they want it to burn and then to remake it after their own fashion.

We’d be wise to remember that on the other side of the crumbling/burning, when the rebuild begins, there will still be those out there that want to rebuild it, but not the way ‘we’ do. Unfortunately, ‘they’ may still be ‘in power’, and there are governments around the world that will be more interested in helping ‘them’.

Actually, we can go on forever as long as the crash is not allowed to happen. As it stands right now, the crash is already built into the system and the fuse to set it off keeps getting extinguished.

Right now there is about 20%-25% shadow economy (under-the-table for the dullards). When those figures read 33%-40%, the economy can never recover because those people will never come back voluntarily and there cannot be enough agents to force them to come back.

Alinsky will have succeeded in overloading the system but the results will not be what he envisioned.

This is a math problem pure and simple. The MSM is a key enabler in the Great Lie of our times which is that there will always be a way to pay for our folly. Brass tacks – you cut that line of credit off, and it WILL be cut, and the entire house of cards will come crashing down.

There is an enormous amount of denial about this of course, supported by multiple media narratives including the ever popular ‘paranoid / conspiracy theory survivalist’ spiel that had a recent appearance w/r/t Adam Lanza’s mother.

History tells us what happens in a sudden and harsh economic collapse. It’s happening in Argentina right now – limited rule of law, murder, rape, theft. What? You haven’t seen the covearage on NBC/ABC/CBS/FOX?

But for a precious few we have in dc, we will never stop spending beyond what we take in! bho/most r’s/most d’s don’t give a flip what they do? As long as our elected don’t care, just keep spending and giving ‘free stuff’ so they will get re-elected.

We can email, phone, fax, write letter to try and change our elected mine, but they won’t listen! They wait till two minutes till the ‘cliff’ is to go over and pass a bill that we have to pass to find out what’s in it! At any rate, taxpayers get it coming and going?

I wish things would change, but not with those we now have in dc and especially the wh!
L

Well, that was refreshingly honest. Obviously not an American journalist. The democrats can’t keep themselves from lying so they can win elections, but they wouldn’t get away with it so easily without the help of the press. They should be ashamed of themselves.

Oh, the artful distortions of marketing and the great aid of having a state controlled media!

I sat around with a bunch of Germans (in Germany) talking about the folly of WW II. One of them finally offered: “The whole exercise was nuts. Just look at a map for heaven’s sake!” How could our tiny place sustain aggression and occupation over such an area and against those huge enemies?”

Another said: “The idea was to keep people sold on their ability to do anything and a natural lust for fairness and justice.”

I like hearing President Obama harken back to landing a man on the moon and his selling of everything from super villains to scapegoats in lieu of any use of math.

It’s happening in Argentina right now – limited rule of law, murder, rape, theft. What? You haven’t seen the covearage on NBC/ABC/CBS/FOX?

Of course you haven’t.

CorporatePiggy on December 24, 2012 at 12:17 PM

My apology for repeating your thought in another way.

I did see the report of a riot in Argentina on TV somewhere and it showed video of a mall was looted by a huge flash mob. Troops were sent in and a few of those were later arrested. This story was odd to me.

I was out on a date with a woman from down there some time ago.

Naturally, she related the same story you would expect about the inflation. Her employer switched from paying once a month to three times a month so the pay could be adjusted with each check. Her coworkers were angry since it was not four times a month! She also said that they probably learned their lesson since the collapse made for a lot of misery.

On the other hand, an Argentine polo player who ran a camp for my little girl in New York state just shook his head about the Argentine future. He seemed to think there was a cultural problem and that the same disease was present in a lot of places with politicians willing to let it happen.

It’s happening in Argentina right now – limited rule of law, murder, rape, theft. What? You haven’t seen the covearage on NBC/ABC/CBS/FOX?

Of course you haven’t.

CorporatePiggy on December 24, 2012 at 12:17 PM

My apology for repeating your thought in another way.

I did see the report of a riot in Argentina on TV somewhere and it showed video of a mall was looted by a huge flash mob. Troops were sent in and a few of those were later arrested. This story was odd to me.

I was out on a date with a woman from down there some time ago.

Naturally, she related the same story you would expect about the inflation. Her employer switched from paying once a month to three times a month so the pay could be adjusted with each check. Her coworkers were angry since it was not four times a month! She also said that they probably learned their lesson since the collapse made for a lot of misery.

On the other hand, an Argentine polo player who ran a camp for my little girl in New York state just shook his head about the Argentine future. He seemed to think there was a cultural problem and that the same disease was present in a lot of places with politicians willing to let it happen.

IlikedAUH2O on December 24, 2012 at 1:24 PM

In other news Ayn Rand is called an extremist by the same people orchestrating the policies destroying the world.

The president’s proposal for increasing taxes on “the rich” would bring in an extra $40 billion dollars next year.

Putting aside the negligible total in relation to our annual deficit, that $40 billion is most assuredly bogus. Our betters in DC are willfully ignorant of the simple fact that taxation affects behavior and so they are likely to see a fraction of that revenue if not a net loss from the tax hikes.

It would most certainly bring less. Government uses static modeling for predictions of that type – it assumes no change in behavior in reaction to the change. High income people are general those who don’t get their incomes from regular paycheck of a set amount, and have a lot of control over when and how they convert assets to taxable income events. They react to changes that raise marginal rates precisely by altering their behavior to minimize taxes (the lower the marginal rates, the less the change becuase the penalty for acting is lower and the other factors to the deal become more significant to the decision).

No other society has been able to debase its currency as the USA has and survived. We add zeros to electronic databases to float markets, we buy our own debt with “bonds” and “IOU’s” that will never be paid, we import races that share none of our values or honor or past that steal jobs from the indigenous White population and whose children prey on the productive and poison our cities with crime. Europe does the same, only with the added horror of Persia/Islam, an enemy of 1400 years. The inventions and creations of the productive, even the very persons themselves we export to other lands while embracing stupid ideas such as “Free Trade” and “open borders” and high taxation which only speed their departure.

The reason collapse is certain is that not a single incentive exists to force or support the required change. Our politicians are elected/re-elected on the quality of the good news they represent, the goodies they can bring to constituents. And since the discussion is so simple minded- always presented as a choice between austerity and the good life with never a mention of the role of sustainability, we lose. The nation needs to understand there’s no benefit to a level playing field if the games have been canceled.

But, really, anyone who isn’t as dumb as a bag of hammers already knows that the amount of government we have is unaffordable

Well, I think it’s safe to say that the average American media personality and the average American voter are as dumb as a bag of hammers. Unfortunately, they are dragging the rest of us down with them.

Well, I think it’s safe to say that the average American media personality and the average American voter are as dumb as a bag of hammers. Unfortunately, they are dragging the rest of us down with them.

talkingpoints on December 24, 2012 at 4:56 PM

What a sad state of affairs in this country. Thank a commie NEA teacher for this.

We don’t have a revenue problem. We have a spending problem, but that’s not the worst of the problems we face now. We have a delusion that this situation will go on forever without needing a solution that brings spending into balance and working off our debt.

This is very well put Ed! This is an excellent post!! I think you are right about a delusion among many low information liberal democrat voters that this situation will go on forever without needing a solution. Many democrats are delusional about this, however, maybe even more of them know it it totally unsustainable but just don’t care. Certainly the democrats elected to office know it but they only care about maintaining their own power and getting re-elected in the short term.